Commercial vehicles: The appealing compact van

PSA Peugeot Citroen and Fiat together have produced a cute and clever new model

Meet the latest family of vans to be produced under the ongoing collaboration between PSA Peugeot Citroen and Fiat. They're all cute and clever, and the partners believe they will open up a new sector of the market for small urban delivery vans – something that's more than a hatchback or an estate with the rear windows blanked out.

PSA Peugeot Citroen president Christian Streiff wants people to downsize to the new Fiat Fiorino, Citroen Nemo and Peugeot Bipper. "This type of vehicle does not exist in Europe today," he says. "In order to find the right solution for city centres we needed to find something to replace vans that were becoming too big for life in the city."

And the city is where you'll be seeing a lot of these little vans, especially in London. The diesel engines that power them have CO2 emissions below the crucial proposed 120g/km level – which would earn them exemption from Ken Livingstone's congestion charge. So delivery firms might be tempted to use larger numbers of these smaller, but greener, vehicles in order to save the £8-a-day levy – so much for reducing congestion.

The new vans are collectively referred to as the "Minicargo" series, and they look like being very able load carriers. The loadspace is 2.5 cubic metres, and longer loads – say a 2.5m ladder – can be accommodated by folding away the front passenger seat. And all this is achieved in an overall length of only 3.86m – shorter than a Ford Fiesta.

There's no word yet on prices, but Citroen president Gilles Michel says it'll be Citroen's entry model – so it'll be cheaper than the Citroen Berlingo, which starts at £9,395. A figure of around £8,000 wouldn't be too far off. And while the vans will be cheap, they'll not be basic, Michel adds. "Van drivers don't want to find themselves in the world of 25 years ago – they want air-conditioning, ABS, telematics, electronic functions, so you are getting that in this vehicle."

Indeed, he doesn't refer to it as a low-cost vehicle. "I associate that with a car for poor people or a car that has been stripped of all its equipment. That is not what we are doing. We have a very competitive van that has a low manufacturing cost. But it is modern, well-equipped, and stylish. A vehicle of the 21st century, not the 1990s."

Nevertheless, the vans have been developed using low-cost manufacturing, and existing platforms and transmissions have been adapted in order to keep the investment levels down. Total investment in the Minicargo project was £265m, £132m of which was spent on research and development – "less than usual" for a new model, Michel says.

Minicargo is a PSA-led project, he adds. PSA identified the need for the vehicle, but did not have a suitable plant or a suitable platform on which to build it. It made sense to talk to Fiat, as the two companies already have two joint factories, Valenciennes in France and Val di Sangro in Italy.

Both Fiat and PSA submitted designs for the Minicargo, but the PSA design was selected. But it was Fiat's crucial input in finding the production site that allowed it to happen. Building the vehicles in Turkey brought cost savings of 20 per cent. "This project wouldn't have been realised if it had been produced in France," says Michel.

Fiat's relationship with Turkey's Tofas stretches back more than 30 years. It also builds the Doblo Cargo light commercial vehicle, and Fiat has recently pumped a lot of money into Tofas in order to build the Linea, a four-door saloon.

Linea's platform – basically a beefed-up Grande Punto – provided an ideal base for the Minicargo, while Tofas' highly automated factory in Bursa, Turkey, was a perfect low-cost base for the project. With Tofas coming on board as a partner as well, the investment costs have been spread across three companies, so the project should be profitable even at relatively low volumes – 160,000 vehicles will be built in a full year, two-thirds for PSA and one third for Fiat, including about 8,000 to be sold in Turkey by Tofas.

At the factory, Minicargos roll down the same production line as the Lineas. The factory is very clean and modern – this is no low-cost assembly project. The welding line is highly robotised, and able to cope with a wide range of different vehicles. Fiat's influence is clear – most of the robots are supplied by Comau, Fiat's factory equipment-making subsidiary.

The vans will go on sale in Italy and Turkey before the end of the year, and will reach the UK in the first quarter of 2008. Combined UK sales from Citroen, Peugeot and Fiat are expected to be in the region of 12,000.

The big question is whether Peugeot UK will stick with the quirky "Bipper" name – which Streiff thinks is excellent – or ditch it for something sensible. Citroen did that with its other vans, the Relay and the Dispatch. In Europe, they're called Jumper and Jumpy.